OTTAWA -- Finance Minister Ralph Goodale is launching a public relations offensive through Liberal MPs and senators to defuse anger that Ottawa has punctured the value of income trusts and defend his government's action on the file.
He is equipping his party's parliamentarians to rebut criticism from the public -- providing them with talking points to field questions from constituents -- and is asking them to reroute all calls from the media or tax experts to the Finance Department.
Both Liberal and Opposition MPs have reported receiving regular calls complaining about the fact that Ottawa is seriously considering clamping down on the once red-hot investment vehicle.
Some investors have blamed Mr. Goodale for a big selloff in the trust market and Canaccord Capital Corp. told clients Ottawa is largely responsible for a $23-billion drop in market capitalization between late September and late October.
Fighting back, Mr. Goodale has written Liberal MPs and senators in recent days, explaining his note comes "in light of the concern surrounding the consultation process on income trusts."
His department has also produced a package of talking points to help Liberal parliamentarians "address the concerns of your constituents" including "Key Facts for Basic Oral Responses" and an analysis of recent trust market movements.
One source says about 20 Liberal MPs have raised concerns from constituents over possible changes to income trusts during caucus meetings over the last few weeks.
A senior government official said Mr. Goodale's message on trusts is being released to combat what is considered inaccurate media portrayals of the matter.
"There's been a lot of erroneous coverage all over the place," the official said.
Mr. Goodale also tells Liberal parliamentarians in his note that while investors "and their brokers" are extolling the benefits of trusts these days, they're not the only ones making their views known.
"I have also heard from other equally conscientious Canadians (including -- among others -- some of Canada's leading entrepreneurs, traditionally incorporated enterprises, and several provincial governments) who take the opposite perspective," Mr. Goodale wrote. "They are concerned about the potential long-term consequences of an extensive proliferation of income trusts."
The Finance Minister sent MPs and senators a chart and graph helping refute the idea Ottawa is to blame for softness in the trust market, demonstrating that the decline in trust values mirrors a broader drop among equities.
The Finance Department document points out that "lower oil prices" and "concerns about higher interest rates" have played a part in depressing the market for trusts. "Clearly, the decline in the trust index (which is heavily weighted in energy) cannot be attributed solely to the announcement," it says.
"The announcement has done nothing to affect the level of distributions received by investors from income trusts, which is ultimately what determines the value of trust investments," Finance writes.
The department cautions MPs that the talking points should be used for "general public enquiries from non-experts." It says "all media calls on this issue should be referred" to Finance's communications office and that "calls from tax professionals or other expert stakeholders" should be rerouted to the tax policy branch.
© The Globe and Mail
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.
